SportsInsights.com Article -- Sports Betting Exchanges Review (March 2007)

Over the years, Sports Insights has given our readers insight and suggestions into the best sportsbooks.  Nowadays, it appears that sports betting exchanges are gaining traction in the sports betting industry.  In this article, we give an update on sports betting exchanges and have compiled the "inside scoop" on some of the larger sports betting exchanges.  The information on this site is for entertainment and educational purposes only.  Use of this information in violation of any federal, state, or local laws is prohibited.

Sports Betting Exchanges

Sports betting exchange are gaining in popularity and "user friendliness."  In past years, sports bettors were worried about liquidity or the fact that some betting exchanges were "hard to use."  Nowadays, most sports betting exchanges have the "look" of a sportsbook.  In addition, the lines and pricing are great.  In many cases, you can find better odds and lines at the sports betting exchanges than at the low-vig sportsbooks!   Here are some advantages of the betting exchanges:

• Liquidity has improved greatly at some betting exchanges.  You will normally see relatively large amounts of liquidity at better prices at the exchanges than at most sportsbooks.  Sometimes, you may find only small "bids" offered on the betting exchanges -- but at good prices.
• Note that exchange liquidity and pricing often improves as game time approaches.
• Fees vary widely at the betting exchanges.  They may range from 0% to 5% (and more) on winning bets.  These fees are often separate from the actual transaction (and vig) -- so you need to consider these fees when you enter into any sports betting exchange transaction.
• One big plus about sports betting exchanges is that you are dealing with other sports bettors.  As a result, you won't be banned; you won't be switched to "sharp" or "square" lines.

And here are some disadvantages:

• Currently, many betting exchanges do not offer "Second Half" lines on many sports.  Offerings on "Totals" in college hoops and other less-popular markets are also sparse.
• Liquidity for "smaller games" is sometimes limited.
• If the line moves suddenly, the betting exchange may not create a new market (at the new line) immediately.  This means you will either have to go to a sportsbook or pay the adjusted vig.

Value and Liquidity

Betting exchanges look like they will be "the wave of the future."  Why pay -110 vig when you can deal with a fellow sports bettor and get -103, +100, perhaps even +105??!!  As sports bettors become more informed shoppers, an increasing number of players will migrate to the betting exchanges.  This will lead to increased liquidity, improved pricing for players -- and a self-fulfilling cycle of increased business for the betting exchanges (even better pricing for bettors, and so on).  We believe that the movement to sports betting exchanges will snowball.

One important point to note is that you can use sports betting exchanges in a variety of ways.  Some players will shop the lines offered (called "offers") on the betting exchanges and then "buy up an offer."  If the pricing isn't great, the player might just use their regular sportsbook.  Other players will put out bids and try to see if other players will accept their offer.  In either case, it's a great way to shop around for the best price. 

Matchbook

Matchbook is one of the largest and best sports betting exchanges.  Matchbook benefited mightily when Pinnacle Sports and Mansion retreated from the US market.  Matchbook, which was already one of the largest sports betting exchanges in the industry, is now positioned to be one of the largest players in the entire industry.  Indeed, it appears that the bid-ask spreads at Matchbook have tightened tremendously (as in HUGE value for Matchbook members).  Matchbook is associated with highly-rated book WSEX, so they appear to be very solid.   

• Commissions are 2% on winning plays.  Thus, odds of -103 are roughly equivalent to -105.
• Good liquidity and good lines. 
• For an average sports investor, if you price your plays around, Matchbook will get a large percentage of your plays.
• Does not offer Totals on many College Hoops games.
• Particularly good, tight, spreads for NHL plays.
• When there are many games in a sport, the website layout is not particularly efficient.  There are multiple pages so that you have to click to the correct page to find your game.

Mansion

Mansion is another good sports betting exchange, with some of the lowest fees available.  They recently pulled out of the US market but are still a good operation for non-US players.

• Commissions for SELLERS are 0.5% on winning plays.  Thus, if you take plays that are listed (and are thus, a BUYER), you would pay NO commissions.  Thus, odds of -105 are really -105.
• Overall pricing, lines, and liquidity are similar to Matchbook -- after factoring in the lower fee structure at Mansion.
• Offers Totals on some College Basketball games.
• Nice layout for sports with busy days (such as Saturday's for College Sports).

Tradesports

Over the years, Tradesports has made a name for itself by offering markets on events ranging from Sadam Hussein's capture, to hurricane predictions, and politics.  They offer markets on almost anything people want -- including the stock market, commodities, and of course: sports.  Their markets continue trading live during games in progress, but liquidity varies depending on the popularity of the game and the availability of Tradesport "market makers."

Note that Tradesports offers two kinds of trading platforms.  Historically, markets were traded at Tradesports in a "binary fashion."  That is, market "contracts" expired at either 0 or 100 (Contracts that expire at 100 are worth $10; 0 is worthless.)  To avoid "pushes," sporting events with point spreads are normally moved to a half point line.  Recently, Tradesports created "Tradesports Express" (still in beta phase) which gives players more of a traditional sportsbook feel instead of the 0-100 pricing.  Tradesports has good liquidity in the major sports -- and good breadth of their offerings.

BetFair

BetFair, licensed and registered in the UK, is very popular outside of the US (BetFair has never accepted US customers).  Their software is very well thought out and they offer some interesting features including the "BetFair lab."  Another nice feature is that the software shows you the amount of money that has been "matched" in any particular market.  BetFair offers a wide variety of markets including financial markets, American sports (including halves, total), rugby and soccer.

BetFair charges a commission (BetFair calls this your Market Base Rate) on your winning bets based on your level of play.  Active members can earn discounts on this commission as high as 60%, with most players able to earn discounts in the 0% to 25% range.   

Old Sports Betting Exchange Article

Disclaimer
We do not guarantee that the trends and biases we’ve found will continue to exist. It is impossible to predict the future. Any serious academic research in the field of “market efficiencies” recognizes that inefficiencies may disappear over time. Once inefficiencies are discovered, it is only a matter of time before the market corrects itself. We do not guarantee our data is error-free. However, we’ve tried our best to make sure every score and percentage is correct.